Eye on Austin: Texans may get longer 'break'

State, sales tax deduction could go on

Posted: Monday, November 05, 2007

Enrique RangelColumn

Texas taxpayers who itemize deductions in their federal income tax filings may want to keep an eye on this: State Comptroller Susan Combs is lobbying Congress to continue a temporary law that has allowed those taxpayers to deduct state and sales taxes.

"In Texas, this law has had a significant positive impact on the state's economy, accounting for additional money in taxpayers' pockets, as well as increased job creation, investment and economic productivity," Combs said of a bill Congress passed in 2004 to give a break to taxpayers in states that impose no state income tax.

Extending the deduction would save Texans about $1.2 billion a year, or an average of $520 per taxpayer claiming the deduction, Combs said.

Moreover, continuing the deduction for 2008 and beyond is vitally important because it is associated with 15,700 to 25,700 jobs and $1.1 billion to $1.4 billion in gross state product.

Other state officials are also pushing to make the law permanent. U.S. Rep. Kevin Brady, R-The Woodlands, has filed a bill that would make the sales tax deduction stay.

"This has always been about fairness and about stretching our families' pocketbooks here in Texas," Brady said in a statement. "These are real savings for taxpayers and real jobs for our state."

Two weeks ago, Gov. Rick Perry and the governors of Florida, Nevada, South Dakota, Tennessee, Washington and Wyoming - the other states that impose no income tax - sent a letter to congressional leaders urging them to extend the legislation "for tax years 2008 and beyond."

"I urge Congress to act swiftly to extend and make permanent the state and local sales tax deduction to ensure Texas taxpayers are treated fairly and equally to other states," Perry said in a separate statement.

If the 2004 law is not extended, it will expire at the end of this year.

Another Abbott crusade

Texas Attorney General Greg Abbott is going after crooks preying on homeowners at risk of losing properties and asking mortgage companies to give financially troubled borrowers a break.

Two weeks ago Abbott proposed a series of foreclosure prevention measures to the three largest mortgage lending and servicing companies in the state.

Two months ago, his office convened the Texas Residential Mortgage Fraud Task Force. The force, which includes consumer credit regulators and representatives from the real estate and banking industries, is cracking down on mortgage fraud.

Abbott's latest crusade targets elderly homeowner scammers. He is alerting property owners over 62 with little or no mortgage debt to be careful with the specialized loans called reverse mortgages.

"Under these arrangements, eligible homeowners are promised an up-front cash payout with no obligation to repay the loan," Abbott said in a bulletin. "Even better, the sales pitch goes, seniors can live out the rest of their lives in their own homes - with no monthly mortgage - and have extra money to spend enjoying their retirement years."

So what's the catch? Abbott asks.

"Although seniors are generally not required to repay these loans, once they pass away or permanently leave their homes, that property essentially belongs to the lender," he explained.

"Under a typical arrangement, the lender places a lien on the property in exchange for the cash it provides to the borrower. This allows the lender to recoup the loan, fees and interest, by selling the home after it is vacated."

Seniors interested in a reverse mortgage are advised to contact the U.S. Department of Housing and Urban Development at 1-800-569-4287 for a list of local lenders approved by the Federal Housing Administration.

HUD can supply the name of a government-approved debt counseling agency that can provide useful information to homeowners considering a reverse mortgage.

Seniors should also consider hiring an attorney to help them review reverse mortgage documents, Abbott said.

Seniors can also call his office at (800) 252-8011, or, visit the agency's Web site, www.oag.state.tx.us, to find out about legal clinics and other free legal help.